Q: I want to impose a late fee when my tenants pay late. My apartment association form lease specifies that the fee will be $100 if the rent is three days late or more. In an earlier column, you wrote that I’d have to charge only what it really cost me when I get the rent late. That’s ridiculous — I’ll never be able to calculate that, and besides, it would be too small to deter late payments. –Jack S.
A: You aren’t alone — many landlords are using form leases that specify hefty late fees. These fees accomplish what’s intended — their amount makes tenants either think twice about paying late or go to extremes to borrow the money. Some landlords are candid enough to admit that this policy is a nice profit-generator, too.
But the longevity of an industry practice doesn’t insulate it from legal challenges. And as odd as you may think it to be, setting a late fee that doesn’t bear a close resemblance to what you actually lose when the rent arrives late is contrary to a very old and well-established principle of law. Namely, when someone breaks a contract, the other side is entitled only to be made whole (to be compensated for his actual damages). A pre-set fee that isn’t even close to your losses is legally speaking a penalty. Penalties in consumer contracts are not enforceable, period.
In case you think this is new-fangled, take a look at one state’s very old law regarding late fees for mortgage payments, a very similar situation. Since 1975 in California, lending institutions have been limited to the late fee they can impose for tardy payment on a loan secured by a mortgage or a deed of trust on real property containing only a single-family, owner-occupied dwelling. That fee may not exceed either 6 percent of the installment due that is applicable to payment of principal and interest on the loan, or $5, whichever is greater. (California Civil Code section 2954.4.) Careful attorneys in California use this rule as a safe harbor when counseling their landlord clients on how to craft a defensible late-fee policy.
If you were to do the same, you’d be on solid ground in California at least only if that $100 late fee in your form lease is tacked onto a rent of $1,667. If your rent is less, you might consider lowering the fee. …CONTINUED
Q: Our lease says we cannot have a pet unless the landlord agrees. The renters upstairs have a dog, and we’d like one too. We’ve offered to give the landlord a bigger security deposit, and have promised to be responsible dog owners (cleaning up after the dog and so on). The landlord told the manager to tell us no. Is there anything we can do to change his mind — or get the other tenants to get rid of their dog? It’s just not fair. –Matthew H.
A: Your landlord appears to have given himself maximum flexibility when it comes to pets. He hasn’t promised all tenants that the property will be dog-free (if he had, you could hold him to that promise, which would mean the upstairs neighbors would have to get rid of their dog). Instead, he’s decided to evaluate each request individually. And herein lies the rub — unless the landlord applies fairly objective criteria to each request, and makes the process transparent, he’s bound to run into reactions like yours.
You might want to approach this problem by doing a little research first, into how tenants successfully convince landlords to let them bring pets onto the property. The website of the Humane Society of the United States contains time-tested tips on how to deflect landlords’ worries (check out "13 Steps to Finding Animal-Friendly Rental Housing"). They offer a "Pet Addendum," which makes you responsible for the consequences of your pet’s misbehavior (legally, you are anyway; this simply drives the point home). The addendum also advises pet owners that if they fail to take care of or supervise their pet, any expenses incurred by the landlord (including vet fees, boarding, and the like) will be sent their way.
Even when faced with rational and legally comforting reasons why he should allow you to have a pet, it’s possible that your landlord will continue to refuse. Unless the motive behind the refusal is illegal (for example, based on your being of a certain religion, race, ethnicity, and so on), or retaliatory (for instance, in retaliation after you properly used a tenant remedy, such as rent withholding), there’s not much you can do. Unless, of course, you’re prepared to move. If you are a stable, rent-paying tenant whom the landlord would not want to lose otherwise, and particularly if the market is soft, raising the possibility that your vacant unit will be hard to rent, the landlord may take the practical step of agreeing to your proposal.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@sandbox.inman.com.
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